Go Down, Moses.. To Let My Shekel Go... 😕Shekel drops to 4 against the dollar, in first since 2015.
Currency’s weakness comes as conflict rages, even after Bank of Israel announced plan to intervene in the foreign exchange market to try and contain sharp shekel FOREXCOM:USDILS moves.
The exchange rate of the New Israeli Shekel on Monday crossed the threshold of NIS 4 per dollar, the local currency’s weakest level since 2015, with Israel in its 10th day of conflict with the Hamas terror group.
Since the devastating massacre launched by Hamas on October 7 in Israel’s southern communities, in which more than 1,300 were killed, more than 4,000 injured, and some 200 kidnapped by terrorists, the shekel has dropped by about four percent against the US dollar.
Investor uncertainty over the duration and scope of the conflict has been growing in recent days, with the Israel Defense Forces gearing up for a ground operation to smash the terrorist organization in the Gaza Strip.
The currency’s weakness comes even as the Bank of Israel last week announced a plan to intervene in the foreign exchange market to try and moderate shekel volatility after the country formally declared a state of war. As part of the program, the central bank can sell up to $30 billion in foreign exchange to protect the shekel from collapse.
It was also introduced to “provide necessary liquidity for the continued proper functioning of the markets,” the Bank of Israel said.
Israel’s consumer price index (CPI), a measure of inflation that tracks the average cost of household goods, unexpectedly decelerated 0.1% in September, before Hamas’s unprecedented attack, figures by the statistics bureau.
Following the lower-than-expected September print, economists and market participants have started to price in an interest rate cut by the Bank of Israel as early as at its next monetary policy meeting on October 23, or even earlier, should it be necessary.
The September CPI index points to the fact that the economy was slowing even before the conflict broke out.
Meanwhile technical graph for FOREXCOM:USDILS says, U.S. dollar is about to break out major multi year resistance against shekel, where 4 shekels is a key to watch at the end of Q4'23.
